This Energy Stock Could looks interesting for 2021

June 11, 2021 06:59 AM EDT | By Raza Naqvi
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The Canadian energy industry has rebounded after a fall during the pandemic. However, the sector is undergoing a transition as the key players look at optimising the use of current energy resources and adopt new technologies to lower carbon emissions.

This change will not only help the oil and gas companies drive growth but also align with the government's goal of building a clean and green economy. The industry with its innovative approach is set to play a key role in the country's economic growth.

To emphasize the importance of the oil and gas industry, Canadian Minister of Natural Resources Seamus O'Regan had said in January 2021 that Canada will not be able to achieve its climate goals without this industry.

Overall, the energy industry has shown signs of growth this year. The S&P/TSX Energy Index soared by 53.4 per cent year-to-date (YTD) and its month-to-date (MTD) growth is about eight per cent.

On Wednesday, June 9, the key players in the Canadian energy sector announced their commitment to the net zero emissions initiative. These companies control approximately 90 per cent of the country's oil sands production. This alliance will focus on the goal of achieving net-zero greenhouse gas (GHG) emissions from their operations by 2050.

Among these companies is Cenovus Energy Inc. (TSX:CVE) which seems to be catching investors' attention for the past few months. The CVE stock has skyrocketed by 57 per cent YTD and grew by nine per cent in the past week.

Let's explore this company further and find out why it should be on your watch list this year:

Here's What You Must Know About Cenovus Energy Inc. (TSX:CVE)

The Calgary-based integrated energy company is engaged in oil sands exploration projects. Cenovus claims that it develops assets safely and innovatively. As investors have pour funds in companies committed to sustainability, Cenovus remains committed to environmental, social and governance (ESG) leadership.

Notably, on January 1, 2021, Cenovus Energy acquired Husky Energy (TSX:HSE) to become the third-largest Canadian oil and natural gas producer. In May this year, Cenovus sold its royalty interest for gross cash proceeds of C$ 102 million. The energy company will use the money to reduce its net debt and achieve the net debt target of C$ 10 billion.

How Is Cenovus Energy (TSX:CVE) Stock Performing?

Outpacing the S&P/TSX Integrated Oil & Gas sector's growth of 36.6 per cent in the past year, Cenovus share prices returned 77 per cent to the stockholders in the same period. The CVE stock catapulted by about 127 per cent in the past nine months and 29 per cent quarter-to-date (QTD). At market close on Thursday, June 10, the scrip was priced at C$ 12.17.

One-year chart of stock performance, volume and multiple moving average of Cenovus Energy (Source: Refinitiv)

According to TMX data, Cenovus holds a market cap of C$ 24.6 billion and its present debt-to-equity (D/E) ratio is 0.75. With a dividend yield of 0.6 per cent, the company pays a quarterly dividend of C$ 0.018 per unit.

The average volume was 6.6 million shares in the last 30 days, and it increased to 7.4 million shares in the last 10 days.

Cenovus Energy's Surprising Financial Performance

In the first quarter of 2021, the integrated energy company posted strong financial results for the period ended March 31, 2021. Cenovus Energy's net earnings were C$ 220 million in Q1 2021, against a net loss of C$ 1.8 billion in Q1 2020.

The integration of Husky Energy's assets helped the company to deliver strong financial results and the company will likely grow more in future. In terms of upstream oil production, the company managed to increase it to 769,254 barrels of oil equivalent per day (boepd). In March 2020, the upstream production from 482,594 boepd.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from Refinitiv.


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